ERI1 is a 3'-to-5' exoribonuclease involved in RNA metabolic pathways including 5.8S rRNA processing and turnover of histone mRNAs. Its biological and medical significance remain unclear. Here, we uncover a phenotypic dichotomy associated with bi-allelic ERI1 variants by reporting eight affected individuals from seven unrelated families. A severe spondyloepimetaphyseal dysplasia (SEMD) was identified in five affected individuals with missense variants but not in those with bi-allelic null variants, who showed mild intellectual disability and digital anomalies. The ERI1 missense variants cause a loss of the exoribonuclease activity, leading to defective trimming of the 5.8S rRNA 3' end and a decreased degradation of replication-dependent histone mRNAs. Affected-individual-derived induced pluripotent stem cells (iPSCs) showed impaired in vitro chondrogenesis with downregulation of genes regulating skeletal patterning. Our study establishes an entity previously unreported in OMIM and provides a model showing a more severe effect of missense alleles than null alleles within recessive genotypes, suggesting a key role of ERI1-mediated RNA metabolism in human skeletal patterning and chondrogenesis.